Syracuse McDonald's restaurants could have $$$ Angus burgers by summer

Charles Rex Arbogast / APThe lights from cars streak past the Rock N Roll McDonald's restaurant in Chicago on Monday. McDonald's Corp. said Wednesday that its first-quarter profit climbed nearly 4 percent as more customers worldwide came to the Golden Arches for a cheap meal.

SYRACUSE, N.Y. -- For those of you who actually do remember, yes, 25-cent hamburgers at McDonald's. Read on...

McD's May Finally Roll Out Angus Burger

OAK BROOK, Ill. -- McDonald's Corp. would neither confirm nor deny on Tuesday the reported national introduction this summer of its long-tested Angus Third Pounder, a product rollout that sources say could spark some franchisee tension.

First reported this week by Crain's Chicago Business, citing franchisee contacts and an internal corporate memo, the Angus burger would be McDonald's first new burger introduction in eight years. The third-pound, 100-percent Angus beef burger had been tested since May 2007 in Southern California, New York City and Columbus, Ohio. The franchisor suggested price was $3.99.

Published reports and other sources have indicated the premium product would help McDonald's compete against chains like Carl's Jr. and In-N-Out Burger, which have long focused on larger, premium burgers. Proponents also say the McDonald's Angus burger would compete head to head with Burger King's newest Steakhouse XT burger, which features a larger patty made possible by the chain's new larger broiler equipment.

Reports are surfacing, however, that some franchisees are not fully behind the pending introduction, saying that the economy is too precarious for the systemwide debut of a higher-priced, premium product. Even more, with the continued introduction of McCafe premium coffees, some franchisees fear McDonald's is trending too far away from its value focus and placing too much strain on franchisee operations.

One franchisee in New York City, who asked not to be identified, said he was not convinced that now is a good time for the franchisor to focus marketing and menu efforts on higher-priced offerings, as most consumer research shows restaurant guests picking value-based, lower-priced items.

In an April McDonald's franchisee survey by former stock analyst and independent researcher Mark Kalinowski, one unidentified McDonald's franchisee called the Angus burger "another poor margin item."

In the same study, Kalinowski asked franchisees how they viewed the McCafe rollout and whether it would hurt or help same-store sales in 2009. Of the respondents -- 31 domestic franchisees that represent about 213 restaurants -- 16 percent said McCafe and the premium coffees would boost sales, while 32 percent said it would weaken sales, and 52 percent said the rollout would have no impact.

One unidentified franchisee was quoted by Kalinowski as saying: "We are about to take our focus off the McDonald's brand to sell coffee drinks at a very bad time. We should be focused on food and value."

Other franchisees did say the coffees will provide consumers with an alternative to Starbucks, especially at a time when the Seattle-based coffeehouse chain is struggling.

McDonald's system includes about 31,000 locations worldwide.

I can see the pros and cons regarding McDonald's introducing a relatively pricey menu item in times like these.

First, if you rest on your laurels, you're out of the race. You have to keep up with the competition, Burger King, Carl's Jr., etc. When you start to view Starbucks as your competition and that competitor is struggling with its business model, then it's a good time to roll out something major -- the McCafe's.

But let's also step back from this. You saw the caption on the picture. McDonald's is doing pretty darn well in times like these. Perception is everything and every one of us who grew up with McDonald's has the perception of it being a place to get a cheap, quick (although unhealthy) meal. When you mess with that perception, it throws people off (re: Kentucky Fried Chicken and, for that matter, re: Starbucks. We had a perception of Starbucks as trendy and pricey and we could live with that. When Starbucks overgrew and added too much and too many price lines to its model, its image blurred.)

Your thoughts?

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* RollsRoyce comments, "Bob: Speaking of national ads appearing on local television and media, this Web site has featured several banners for national retailers and products without a presence in Greater Syracuse including Nordstrom and Land Rover. Several months ago, I saw an ad for Lexus which listed a New Jersey dealership location, even though Syracuse has always had its own Lexus dealer in the northern suburbs. Granite Broadcasting, the owner of WTVH-TV used to have Neiman Marcus banners on its Web site. Although I can understand why a major retailer would make a bulk purchase of ads to be displayed on all local television Web sites in broadcast company's portfolio, Granite's properties are almost all in second and third tier markets like Buffalo, Peoria, Fort Wayne, and Binghamton where Neiman does not have stores."

As for Syracuse.com, although it carries our stories, videos, photos, blogs, etc., it is ultimately operated out of New Jersey by an affiliate of the Newhouse-family owned company that owns newspapers (including The Post-Standard) and magazines, Advance. So yes, you do see ads for retailers that don't have stores near here. I saw an ad today for Bergdorf Goodman. My guess is they, like Lexus, bought advertising that was carried on the Web sites of all the Newhouse newspapers.

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